Quick take: Magni-Tech shares up 8% on earnings beat

KUALA LUMPUR: Magni-Tech Industries Bhd’s shares rose to its highest in three months in early trading on Tuesday after reporting a 50% jump in net profit in the third quarter ended Jan 31.

The garment maker rose 8.12%, or 19 sen to RM2.53 with 1.11 million shares done. It is currently trading at a PE ratio of 8.26 times.

Magni-Tech’s net profit in the three-month ended Jan 31 jumped 50% to RM48.9mil, or 11.3 sen a share on revenue of RM368mil.

It has declared an interim dividend of 4.5 sen a share.

For the nine months under review, net profit rose 3.8% year-on-year to RM96.5mil while revenue dropped 1.4% year-on-year to RM928.9mil, mainly due to the negative impact of the Covid-19 pandemic.

PublicInvest Research said Magni-Tech’s cumulative 9MFY21 core net profit of RM92.6mil were above expectations, accounting for 81% of its full-year estimates.

“We adjust our earnings estimates upwards by 3-6% to account for the robust sportswear demand, driven by the revival in major sporting events and the rising health awareness leading to a more active lifestyle.

“As such, our SOP-based target price is subsequently raised to RM2.88 (previously RM2.80),” it said.

The research house said its target price implied a potential upside of 23.1%.

Hence, it upgraded Magni to outperform. In addition, Magni declared a 4.5sen dividend, bringing the YTD dividend declared to 8.3sen.

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